Detroit on Friday will file its long-awaited proposal for how it will treat debts and operate city government as it works to get out of bankruptcy, the office of the city’s emergency manager confirmed today.

The critical documents mark the next big step in Detroit’s record-setting $18-billion Chapter 9 municipal bankruptcy, and the proposal is expected to offer much more detail on how the city plans to cut its debts, offering some creditors as little as 20 cents on the dollar.

Bill Nowling, a spokesman for emergency manager Kevyn Orr, said the city is expected to file its plan of adjustment in federal court in Detroit sometime Friday, along with a related document called a disclosure statement.

That document is expected to lay out the city’s plans for streamlining operations and in some cases boosting core public services such as police and fire protection, blight removal and public transportation.

The initial proposals are sure to face objections from creditors, and, depending on the severity of disagreement, legal challenges could stretch out for months. Orr has stressed a level of urgency to get as much agreement as possible quickly because his tenure as the state-appointed controller of Detroit is expected to end in September.

An earlier draft version of the plan of adjustment, obtained by the Free Press, showed the city proposing steeper cuts to banks and bondholders than it would seek from Detroit’s pensioners, in part because of a deal in the works in which charitable foundations, the state government and the Detroit Institute of Arts would cough up more than $800 million to make up for pension underfunding in exchange for spinning off the city-owned art museum as an independent charitable trust.

That agreement still must be approved by the state Legislature. Gov. Rick Snyder wants the state to contribute $350 million over 20 years for the so-called grand bargain to spare the DIA from selling art and shoring up the city’s underfunded pension plans.

The plan of adjustment also may have to leave blanks to be filled in later on major initiatives still under negotiation, including a deal in which the city would own but cede management of its sprawling Water and Sewerage Department to a regional authority with much more suburban control. In exchange, the city would lease the department’s assets to the authority so it could raise $47 million a year for 40 years from the suburbs. Suburban leaders, including county executives L. Brooks Patterson of Oakland County and Mark Hackel of Macomb County have so far balked at the proposal.